Last year, during ‘summer of DeFi’, the DeFi ecosystem looked very different from as we know it today. Users of protocols were limited to early adopters and builders. Most DeFi projects lacked sustainable liquidity. And, yield farming was an obscure term outside the agriculture domain until triple digit APYs became the rage.
The complexities of the applications running on decentralized networks were not standardized for security, there were a lot of untested governance and crypto economic models, and the average user was participating for attractive incentives without truly understanding the financial and/or security implications of making those investments.
Even with all these limitations and challenges, the value proposition and the vision of DeFi to one day become the foundation of global financial and trade markets was starting to get more clear. As Stani Kulechov, Founder of AAVE said back in mid last year: ‘The ecosystem (DeFi) is still small, I think it is $10bn at the moment which is nothing compared to traditional finance. However, now people are building and you actually start to feel that it’s becoming an economy of its own.’
Observing the growing market and the requirements of the industry, Open DeFi was established around the end of DeFi summer by gathering some of the leading DeFi protocols across the globe to advance the collaboration of DeFi protocols across blockchains and borders. The member network came together to combine forces to align priorities, research, internal capacities, and data towards the applications of DeFi. Today we have over 30 members and are still growing.
The three main goals of Open DeFi since our inception are:
- To develop new opportunities and bridge global DeFi markets for greater growth.
- To align priorities, research, internal capacity, and data towards the applications of DeFi.
- To focus on Liquidity, Security, and Innovation to drive DeFi growth.
We have focused on providing the necessary support to big and small projects and successfully facilitated dozens of connections. Our initial group of members from Asia have helped some of the western partners to establish operations in China, grow developers and investor communities, and get access to exchanges for listings. We have initiated multiple partnerships for redeployments and protocol integrations within our network.
Multi-Chain Era Begins
DeFi protocols have grown in popularity with promising yields for the liquidity providers and have taken over the majority of transaction volumes on the Ethereum network. While the Ethereum DeFi ecosystem proved to attract over 1 million unique users and attract billions of liquidity with its composability and trustless structure, the new demand has led to mass-congestion of the Ethereum mainnet and prohibitively expensive transactions for all but the whales.
This has led DeFi protocols to take a more multi-chain approach, ready to be tapped by the millions of new users entering the space. Today there is an active DeFi movement on many layer-1s. Most of the new chains are EVM compatible and are integrating with popular Ethereum wallet solutions. These networks are rapidly replicating the open-source protocols and infrastructure components to get closer to achieving the composability that Ethereum provides with DeFi money legos. TVL on BSC, Polygon, Solana, Conflux, Cosmos, xDAI and others have gone up significantly.
In Oct 2020, Ethereum secured nearly 98% of the total DeFi market with over $10 Billion TVL, while the rest of the chains had less than $150 Million combined. Today the total value on other chains is more than $35 Billion, a growth rate of 270X! This is now more than 30% of the entire DeFi market.
Along with the exorbitant gas prices, another factor that has contributed to this growth of multi-chain DeFi is the advancements in cross-chain infrastructure and liquidity solutions between Ethereum and other sidechains and L2.
This multi-chain future will have a net-positive impact on Ethereum and the overall DeFi movement as faster sidechains will attract more retail investors and DeFi power users that are not whales. DeFi transactions will go beyond ape-ing into fast-food protocols and speculation to become the founding blocks of most of our digital lives, whether investing in markets, taking out loans, interacting on new social media platforms, collecting art, or purchasing real-estate. Our member network believes that DeFi will soon turn to the assets of the future such as data tokens, social tokens, and NFTs, to sustain the liquidity needed to take DeFi to the masses.
What started as an alliance to bring a few industry partners in building the future of DeFi has today become a global community of 10K+ DeFi developers and strategists. We have worked with 100+ DeFi projects through our members network, launchpad program, hackathon, community events.
The Open DeFi community has taken an active role in ensuring that we are making the right decisions to contribute effectively in supporting the evolution of the multi-chain DeFi landscape.
The Open DeFi hackathon is currently live on Gitcoin with over $150K in prizes, co-sponsored by Uniswap, Synthetix, Badger DAO, Ocean Protocol, Polygon, ZKswap, Oasis Protocol and many others. A lot of the hackathon bounties are focused on redeployment of successful Ethereum projects onto other networks and on building composability tools and asset management mechanisms on new L1/L2s.
We have organized regular online community tech talks and podcasts that have included Balancer, dYdX, Reach, Gnosis and many more. We launched a security standards research blueprint, led by Quantstamp, Barnbridge, mStable & dForce, to guide cross-chain protocols in effectively disclosing risks associated with institutional scale investment in DeFi.
After an influx of inbound from early-stage DeFi protocols, Open DeFi launched the Launchpad pilot program, an initiative focused on providing matchmaking and marketing to over a dozen promising new projects including Smoothy Finance, RAMP DeFi, Domination Finance and many others. Launchpad projects have been primarily successful in getting early liquidity, market-making services and funding from community and investors since joining the Launchpad program. After working with all these projects in different capacities, we came across some exciting challenges that are commonly observed by projects in DeFi.
Most of the early-stage projects are looking for support on modeling functional token-economic principles that are resilient to gaming, defining proper contributors incentives, navigating the regulatory grey-zones, raising early funding, assessing the protocol security. While the established projects are looking for partners to integrate their technologies and enter new geographies for growing the user base, especially in Asia where the cultural and language barriers require well crafted go-to-market strategies.
The Open DeFi community has valuable insights and suggestions to navigate these shifting trends in DeFi, putting us in a unique position to assist other upcoming projects. We have a huge global community to leverage and want to continue doing the ecosystem building and a lot more at a much larger scale. For this reason, we decided to create the Open DeFi DAO.
DeFi For All
After several conversations with our member networks, community, and the multiple projects we helped launch through our pilot launchpad program, we discovered the several pain points in launching a multi-chain DeFi protocol. After months of planning and collaboration with a wide-range of DeFi projects in the space, we designed an innovative solution using the power of DAOs and community to help solve the multiple challenges facing the cross-chain DeFi space.
Open DeFi DAO is an ecosystem DAO, formed to launch the breakthrough DeFi projects of tomorrow and generate long term value through community based development and incubation of early-stage financial protocols, applications, tools, and infrastructure.
The Open DeFi DAO community manages long term multi-chain venture building strategies and short term multi-chain yield strategies. The governance and operations of the Open DeFi DAO will be truly community driven, as membership will be permissionless, and anyone can join the DAO and participate fully.
Members of the DAO will govern the diversification of the Open DeFi ecosystem, and work towards building the largest and most diverse balance sheet in DeFi. Members of the DAO will govern the diversification of the Open DeFi ecosystem, and work towards building the largest and most diverse balance sheet in DeFi. Members will decide where best to allocate not only Open DeFi tokens, but also external sources of revenue such as trading fees coming from our native vaults. Using a deep and diverse balance sheet, Open DeFi will create a new money lego in the DeFi stack which will help focus on helping seed the next-generation of DeFi primitives with liquidity bootstrapping and other ventures support services.
The Open DeFi community believes that the future of decentralized finance will be optimized only through values and endeavors that are immersed in non-tribalism, collaboration, exploration, and multi-chain at its core.
We created Open DeFi DAO to work with all layer one ecosystems and explore DeFi markets surrounding new digital asset classes, including NFTs, data tokens and more. The goal is to develop a truly integrated multi-chain DeFi ecosystem that will open up liquid markets and establish a new operating system for finance. To kick things off, we will share a sneak-peek to the first incubated project of Open DeFi, OptyFi.
Open DeFi’s First Incubated Project: OptyFi
Over the past few months, Open DeFi also incubated OptyFi, a multi-chain yield optimizer with a flexible on-chain strategy execution engine that can perform multi-step, leveraged yield strategies across multiple protocols. OptyFi will launch with vaults on Ethereum, Binance Smart Chain, and Conflux, with more layer 1 networks in development, enabling the protocol to execute truly multi-chain strategies. OptyFi will also host and maintain the first vaults native to Open DeFi DAO.
As the first incubated project by the Open DeFi DAO, OptyFi is a key pillar of Open DeFi’s fully integrated multi-chain DeFi ecosystem. With the team’s expertise in multi-chain vaults and cross chain yields, there is no other project better positioned to host and maintain the multi-chain vaults native to Open DeFi DAO. With the help of OptyFi, Open DeFi DAO’s own cross-chain vaults will evolve into a marketplace for competitive and sustainable cross chain yields.
Connecting the dots from our journey so far, from creating a community led movement, to supporting multiple early-stage projects through our launchpad, and incubating cross-chain projects such as OptyFi, it’s now time to take the next evolutionary step for Open DeFi, and hand governance & operations over to the community. This DAO will lay down an effective, permissionless and democratic infrastructure to scale our mission across the entire DeFi space.
Open DeFi DAO is structured so that we can include and rely on the entire decentralized finance community to build out an open DeFi ecosystem for all. No matter what ecosystem you belong to, if you are a yield strategist, developer, founder, or community leader, we invite you to join the Open DeFi community and help turn this vision into a reality.
Over the next few weeks, we will be sharing several blog posts starting with the mechanisms and functionality of the Open DeFi DAO, followed by the exact dates of the launch which will outline all the things in relation to the launch and distribution. We will also release an audit report before product launch for the community to review the code before participating in the DAO.
Join our mission in our channels — we’d love to hear from you!
*This article is for informational purposes only. Please seek independent legal and financial advice in your jurisdiction before making any investment decisions. The Open DeFi Token is strictly used to govern the DAO and it’s activities. The token has no monetary value.*